A partner at an esteemed Minneapolis law firm lost his job, agreed to be disbarred and is likely to face federal criminal charges for stealing as much as $2 million from a half-dozen clients, according to documents, his former employer and his lawyer.

Michael S. Margulies, 56, who specialized in real estate law for the Lindquist & Vennum firm, also resigned last week from his long-held seat on the St. Paul Planning Commission and from the board of the Children's Theater Company of Minneapolis.

His bosses became suspicious recently after learning that he had double-billed a client. When the client alerted Margulies, he delayed repaying them, said the law firm's managing partner, Daryle Uphoff.

Then the firm discovered that the 26-year employee also had submitted false expense reports for dinners.

Margulies' ethics lawyer, Eric Cooperstein, said his client is "likely" to face federal charges and agreed to the disbarment to minimize fallout on others from his behavior.

"It's very clear he was acting alone," Cooperstein said. He said fighting disbarment would have been futile because of extensive documentation. "There's a trail of where money went," he said.

Margulies primarily used the money for extensive renovations at 516 Summit Av., a historic brick mansion in St. Paul that he shared with his wife until they were divorced last year, according to a Ramsey County District Court lawsuit filed late last week by CMB Minnetonka, a development firm that was among his clients.

His ex-wife, Jeanne Forneris, however, issued a statement through her lawyer disputing that any "ill-begotten funds" had been used on the home, which is now in her name. "We intend to vigorously defend against CMB's allegations," wrote her lawyer, Joseph Anthony.

The four-bedroom, 4 1/2-bathroom home, built in 1914, is assessed at $1.5 million for 2011 and is on the market for $1.75 million.

The law firm fired Margulies on March 15. An investigation found he had established Triad, a phony business through which he stole clients' money, Uphoff said, adding that it's believed Margulies stole roughly $2 million.

Uphoff said the firm demanded that Margulies report himself to the State Office of Lawyers Professional Responsibility. It recommended he be disbarred, and he agreed, according to documents filed with office.

The law firm also handed over documents to the U.S. attorney's office and met with FBI agents as recently as last Thursday, Uphoff said.

Forneris, general counsel for Minnetonka-based American Medical Systems, was a vice president at Fridley-based Medtronic until February. Lawyer Anthony's statement said there is no evidence or allegation that she was involved in or aware of her ex-husband's activities.

In its lawsuit, CMB claims Margulies embezzled to pay liens or mortgages on the Summit Avenue home and to finance additions and improvements. CMB was set up to develop a parcel near Ridgedale Mall. The lawsuit contends Margulies funneled CMB's money into an account for Triad.

Doug Elsass, representing CMB, seeks to establish a trust with proceeds from the home's sale until CMB can be repaid what was stolen, plus damages and attorney fees. "It's in everybody's interests the proceeds come out of this property," Elsass said.

Margulies had been licensed to practice law in Minnesota since 1978. He started working with and stealing from CMB in 2002, the lawsuit alleges.

Uphoff noted that Margulies' dealings went undiscovered because they were done off of the firm's books and didn't show up in routine audits.

"He was extremely clever," Uphoff said. "We are stunned, of course. Dismayed. We're not aware of any one incident that pushed him over the edge, but apparently this has gone on for a long time."

"He's seeking counseling," Cooperstein said. "He needs to figure out for himself what led to all of this." Margulies' criminal lawyer, Joe Friedberg, said, "I have no comment."

Margulies is the second partner in a top-flight Minneapolis law firm to be forced out in recent months. Former Gray Plant Mooty partner Aaron Biber has been unaffiliated with that firm since he was charged in December with raping a drunken 15-year-old boy. He is set to go on trial in Hennepin County in July.

The city plans to spend a total of $95,000 on an outside communications consultant for the project, which should be "substantially complete" next month but has frayed nerves and hurt small businesses downtown.